Record-Setting Fine Issued Against Fiat Chrysler Over Mishandled Recalls
Following a public hearing on July 2, 2015, the National Highway Traffic Safety Administration (NHTSA) has issued a record-setting fine against Fiat Chrysler for their mishandling of 23 recalls of over 11 million defective vehicles. The NHTSA has ordered the automaker to pay $105 million in fines, $70 million of which is a cash penalty, $20 million of which is to to be spent on meeting performance requirements, and an additional $15 million in fines will be issued if an independent party discovers the automaker has violated other safety laws.
During the public hearing, the NHTSA provided evidence that Fiat Chrysler repeatedly failed to notify consumers about recalls, failed to make repairs available in a timely manner, and in some cases, issued repairs that failed to adequately address the problem. The $105 million fine is currently the largest penalty ever issued by the NHTSA, surpassing the previous record of $70 million in fines they issued against Honda earlier this year for failing to accurately report deaths and injuries related to defective airbags. Fiat Chrysler did not dispute any of the allegations they faced during the hearing.
In addition to the $105 million in fines, Fiat Chrysler was ordered to buy back about half a million vehicles with defective suspensions, which could cause drivers to lose control of their vehicles. They are also ordered to allow owners of Jeeps with rear-mounted fuel tanks to trade in their vehicles for rates above market value. The Jeeps with rear-mounted fuel tanks were one of the most widely-publicized recalls included in this hearing. The placement of the fuel tanks increased the risk that the vehicle could catch on fire when hit from behind, even at a low speed. These Jeeps were linked to 75 deaths and a recall for them was announced in the summer of 2013, but the NHTSA was not impressed by the automaker’s slow pace at making repairs available. As a way to help get these dangerous vehicles off the road, Fiat Chrysler was ordered to notify owners of these vehicles that they’re eligible for buyback or other financial compensation.
Fiat Chrysler has also agreed to three years of increased government oversight. This involves having an independent monitor evaluate the automaker’s recall procedures and safety performance and report back to the NHTSA about how the automaker is doing and any steps they are taking to improve.
NHTSA Administrator Mark Rosekind said, “Fiat Chrysler’s pattern of poor performance put millions of its customers, and the driving public, at risk. This action will provide relief to owners of defective vehicles, will help improve recall performance throughout the auto industry, and gives Fiat Chrysler to embrace a proactive safety culture.” U.S. Transportation Secretary Anthony Foxx says, “This civil penalty puts manufacturers on notice that the Department will act when they do not take their obligations to repair safety defects seriously.”